Author Topic: When is an HSA not needed?  (Read 2988 times)

englishteacheralex

  • Handlebar Stache
  • *****
  • Posts: 2412
  • Age: 40
  • Location: Honolulu, HI
When is an HSA not needed?
« on: October 08, 2016, 07:33:10 PM »
Hi Mustachians!

We have extremely good health insurance, and we are generally healthy people with no medical conditions. My husband works for the VA with federal insurance, and his and my son's co-pays for doctor visits/prescription meds are very small. I have pretty good primary insurance for free through my job, and then secondary insurance through my husband that covers all my co-pays. So, for example, when my son was born, the bill for me was $0, and my son cost $150.

I have to pay for contact lenses every year, which usually costs about $50 after reimbursement from my insurance. We put $40/month in a small (non tax-sheltered) bank account towards health costs, which generally all get used up on contact lenses, glasses, and various medications/health related products, some of which might not even count for HSA expenses.

So I've always reckoned that it isn't worth having an HSA, because doesn't that money just evaporate at the end of the year?

What am I missing? Should we set this up?

MDM

  • Senior Mustachian
  • ********
  • Posts: 10360
Re: When is an HSA not needed?
« Reply #1 on: October 08, 2016, 09:09:41 PM »
It's a common confusion, so join the crowd in mistaking a Health Savings Account (HSA) for a Flexible Spending Account (FSA).

See Health savings account - Wikipedia, the free encyclopedia and Flexible spending account - Wikipedia, the free encyclopedia.

To contribute to an HSA, you have to be covered by a High Deductible Health Plan (HDHP).  Do you have that option?

See also http://www.madfientist.com/ultimate-retirement-account/.

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1723
  • One Does Not Simply Work Into Mordor
Re: When is an HSA not needed?
« Reply #2 on: October 08, 2016, 09:54:08 PM »
It doesn't disappear. Mine is up to $16k and I think about $1.5k of that is market returns and dividends. I think it always works out in favor of an HSA, but do the math for your own case.

nobody123

  • Pencil Stache
  • ****
  • Posts: 519
Re: When is an HSA not needed?
« Reply #3 on: October 10, 2016, 10:27:34 AM »
I didn't contribute to a FSA when I was younger, because I figured I rarely went to the doctor and the "use it or lose it" nature turned me off.  Then my first was born and I paid a healthy chunk of change out of pocket, and I realized that I could have saved a ton of money had I done a flex account for that year.  The following year, I put a few hundred aside to see how the whole thing worked and see if it was worth it to me.  The year my second was born I put the max into the flex and it saved me several hundred dollars.  I funded a flex account until I switched to a HSA and HD plan.  It's a good deal if you use it properly.

If you know you spend $X on contact solution, lenses, etc. every year, just put that much towards the flex account and at least save some money.  If it turns out you didn't spend it all, just buy a bunch of contact solution in December to make sure you don't lose your money.

Mother Fussbudget

  • Pencil Stache
  • ****
  • Posts: 840
  • Age: 58
  • Location: Indianapolis, IN
Re: When is an HSA not needed?
« Reply #4 on: October 10, 2016, 12:28:18 PM »
It's a common confusion, so join the crowd in mistaking a Health Savings Account (HSA) for a Flexible Spending Account (FSA).

See Health savings account - Wikipedia, the free encyclopedia and Flexible spending account - Wikipedia, the free encyclopedia.

To contribute to an HSA, you have to be covered by a High Deductible Health Plan (HDHP).  Do you have that option?

See also http://www.madfientist.com/ultimate-retirement-account/.

+1. 

Yes, you should set this up.  MadFientist has written a number of articles about using HSA accounts as 'another retirement account'.  The funds do NOT 'go away' at the end of the year as in an FSA.  Most people pay any medical expenses out-of-pocket prior to FIRE, and Save-The-Receipts!!.  You can withdraw funds from your HSA equal to your expenses *at any time* - whether or not you spend the withdrawals on those expenses, or on something else is up to you.

ohsnap

  • Bristles
  • ***
  • Posts: 280
Re: When is an HSA not needed?
« Reply #5 on: October 10, 2016, 12:47:55 PM »
...

Yes, you should set this up.  ...

But the OP isn't eligible.  I agree that anyone who is eligible shouldn't skip this, but...she has rich primary and secondary health coverage.

catccc

  • Handlebar Stache
  • *****
  • Posts: 1683
  • Location: SE PA
Re: When is an HSA not needed?
« Reply #6 on: October 10, 2016, 01:03:00 PM »
Like others have said, I think you mean an FSA, not HSA.  You can just put in what you will use, it's up to you if it is worth the time of requesting reimbursement or submitting documentation.  But you can use it for copays, your vision correction things, first aid items, and mileage.  I certainly think it is worthwhile, but between copays and balance billing from my out of network dentist, 2 eyeglass wearers and 1 contact wearer in the house, and kids that do things like stick beads up their nose landing us in urgent care facilities... it's an easy call for me to put away a couple grand a year.

Plan rules may vary, but my employer allows you to incur expenses thru 3/15 of the following year, and submit expenses thru 3/31 of the following year.  I've never left anything on the table.  I have stocked up on contact solution and bandages at year end.  We use band-aids like they are going out of style with my kids...

MDM

  • Senior Mustachian
  • ********
  • Posts: 10360
Re: When is an HSA not needed?
« Reply #7 on: October 10, 2016, 07:01:07 PM »
But the OP isn't eligible...she has rich primary and secondary health coverage.
So did we - until we switched to an HDHP and then we could do an HSA.  It's about the time to be picking next year's policy, so it can't hurt to look.

As they "are generally healthy people" an HDHP/HSA combination could be favorable, but there's also "...pretty good primary insurance for free through my job" to consider.  Need to look at the actual premiums and then speculate on the upcoming year's medical use.

JLee

  • Walrus Stache
  • *******
  • Posts: 6138
Re: When is an HSA not needed?
« Reply #8 on: October 10, 2016, 07:08:34 PM »
It's a common confusion, so join the crowd in mistaking a Health Savings Account (HSA) for a Flexible Spending Account (FSA).

See Health savings account - Wikipedia, the free encyclopedia and Flexible spending account - Wikipedia, the free encyclopedia.

To contribute to an HSA, you have to be covered by a High Deductible Health Plan (HDHP).  Do you have that option?

See also http://www.madfientist.com/ultimate-retirement-account/.

+1. 

Yes, you should set this up.  MadFientist has written a number of articles about using HSA accounts as 'another retirement account'.  The funds do NOT 'go away' at the end of the year as in an FSA.  Most people pay any medical expenses out-of-pocket prior to FIRE, and Save-The-Receipts!!.  You can withdraw funds from your HSA equal to your expenses *at any time* - whether or not you spend the withdrawals on those expenses, or on something else is up to you.

Do you need actual care provider receipts, or is the health insurance statement showing $XXXX out of pocket for calendar year XXXX sufficient?

I get billed in the mail ($0 copay) and don't recall getting a receipt from anyone, except maybe my eye doctor.

ender

  • Walrus Stache
  • *******
  • Posts: 5570
Re: When is an HSA not needed?
« Reply #9 on: October 10, 2016, 07:53:16 PM »
It's a common confusion, so join the crowd in mistaking a Health Savings Account (HSA) for a Flexible Spending Account (FSA).

See Health savings account - Wikipedia, the free encyclopedia and Flexible spending account - Wikipedia, the free encyclopedia.

To contribute to an HSA, you have to be covered by a High Deductible Health Plan (HDHP).  Do you have that option?

See also http://www.madfientist.com/ultimate-retirement-account/.

+1. 

Yes, you should set this up.  MadFientist has written a number of articles about using HSA accounts as 'another retirement account'.  The funds do NOT 'go away' at the end of the year as in an FSA.  Most people pay any medical expenses out-of-pocket prior to FIRE, and Save-The-Receipts!!.  You can withdraw funds from your HSA equal to your expenses *at any time* - whether or not you spend the withdrawals on those expenses, or on something else is up to you.

Do you need actual care provider receipts, or is the health insurance statement showing $XXXX out of pocket for calendar year XXXX sufficient?

I get billed in the mail ($0 copay) and don't recall getting a receipt from anyone, except maybe my eye doctor.

I keep our receipts and have a google doc with purchase date, redemption date (if redeemed), and information about the transaction.

You don't really need the receipts unless you get audited, I guess?